Dilma impeached: Picking up the pieces in Brazil

Just over a week after the triumphant closing of the Rio 2016 Olympic Games, Brazilians have to confront the reality that their president, Dilma Rousseff, has just been impeached. Although President Rousseff continually denied having committed any crime that warrants impeachment, interim President (and Rousseff’s former vice president) Michel Temer will now formally become president until the next regularly scheduled elections in 2018. The new administration will have to address the two issues that brought about this impeachment in the first place: an economy that has suffered a massive recession, and the sweeping Lava Jato corruption scandal that implicates both private sector business people and officials at the highest levels of government. Most Brazil watchers expect the pendulum to swing further to the right of Rousseff and her leftist Workers’ Party (PT) agenda.

Trouble for Brazil’s democracy?

Although the word “coup” has been used by Dilma and her supporters throughout, the Brazilian supreme court has unanimously agreed that the impeachment process is constitutional. More widespread is the perception that Dilma’s removal is a purely political move, and many have commented on the hypocrisy of a president being removed for fairly technical violations of budget laws by a Senate where a majority of members face charges of corruption, misuse of public office, and worse.

Deputy Director, Center for International Security and Cooperation, Freeman Spogli Institute, Stanford University

The fact that then Vice President Temer turned on President Dilma also sits poorly with many. There is a perception that politicians are taking advantage of the people’s dissatisfaction with the whole of Brazilian politics to remove Dilma from office. Temer’s public approval has already sunk to 13 percent.

Widespread public dissatisfaction with Temer and lukewarm support for impeachment are not in and of themselves a threat to Brazil’s democracy. However, the way in which this impeachment has been handled has the potential to be highly (and permanently) polarizing. Undoubtedly, the PT will emphasize the narrative of Temer’s “stab in the back” when it seeks to contest the 2018 elections.

Temer’s to-do list

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Temer has little more than two years to establish his legacy as a president who brought prosperity and growth back to Brazil. Brazil is experiencing its worst recession in recent history. This is doubly painful in light of the country’s recent success in drastically reducing extreme poverty and growing the middle class through a combination of high employment, easy consumer credit, and conditional cash transfer programs targeted at the poorest citizens. Given Brazil’s large budget deficit and poor credit rating, Temer is expected to tighten the budget by cutting social spending and transfer payments, particularly Brazil’s famously generous pension system, and employ more market-friendly policies than Rousseff.

However, contractionary economic policies are unlikely to be popular. Temer will also undoubtedly be under pressure from his own political supporters in the PMDB and PSDB parties to implement appealing expansionary policies, both as “pork” to maintain his heterogeneous congressional coalition, but also to prepare the ground to help the center-right parties win the 2018 elections. This may lend a schizophrenic quality to public policy in Brazil over the next two years.

Looming over public policy debates is the ongoing Lava Jato investigation into corruption in the national oil company Petrobras. Under the leadership of Judge Sergio Moro, public prosecutors have been indicting leading politicians and successfully convicting major figures in Brazil’s economic elite. But it will be difficult to root out corruption completely since Brazilian politics depends on the formation of coalitions of political parties based on the exchange of favors. The web of corruption extends so far that trust in the entire political class has essentially been undermined. Temer’s many connections to the old guard of Brazilian politicians raises important questions about the future autonomy of the Lava Jato corruption investigation, and many are worried that the new president will put more roadblocks in the way of prosecutors and judges

Outlook for 2018 elections and beyond

The PT, PMDB, and PSDB parties will all likely be competitive in the 2018 presidential elections. The PT will attempt to set themselves up as the voice of Brazilians critical of Temer. They will undoubtedly play up a “stabbed in the back” narrative to explain away Dilma’s impeachment and promise to bring back popular social programs cut by Temer. The ex-president Lula da Silva, a leading PT figure, remains the most popular presidential candidate for the 2018 election, although he now faces corruption allegations of his own. However, if Temer can position himself as leading a “clean up” administration and is successful in restoring economic growth and rooting out corruption, he could position his PMDB party and his political coalition for victory in 2018. Although the PMDB and PSDB are currently working together as part of the Temer administration, there are a number of prominent PSDB politicians who are expected to seek the presidency themselves. And the massively popular Lava Jato investigation will likely continue to indict and prosecute corruption among Brazil’s elites, regularly delivering surprises to the political class despite whatever new roadblocks may emerge. This makes the path to the 2018 elections quite unpredictable.

For Brazil to stabilize politically and resume its path to prosperity would be positive not only for Brazilians, but also for the United States and the international community. As argued in the recent Brookings Press book, “Aspirational Power,” a Brazil that contributes to international stability and good governance would undoubtedly be helpful to the global order. Brazil would also be better positioned to help forge a regional consensus on how to deal with major problems in the Americas, particularly the increasingly dire political and economic situation in neighboring Venezuela. But the reality of the next two years is that Brazilians will mostly focus inward as they attempt to fortify the institutional and economic foundation of their democracy.